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Previous: PEDIATRIX MEDICAL GROUP INC, S-1/A, 1996-07-25 |
Next: AMERICAN SPORTS HISTORY INC, 8-K/A, 1996-07-25 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 8-K/Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 5, 1996
------------------------------
ATEC GROUP, INC.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in charter)
Delaware 0-227-10 13-3673965
- -------------------------------------------------------------------------------
(State or other jurisdic- (Commission (IRS Employer
tion of incorporation) File Number) Identification No.)
1952 Jericho Turnpike, East Northport, N.Y. 11731
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 462-2832
----------------------------
- -------------------------------------------------------------------------------
(Former Address) (Zip Code)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSET
In June, 1996, ATEC Group, Inc. (the "Registrant" or the "Company")
acquired 100% of the outstanding capital stock of Innovative Business Micros,
Inc. ("Innovative"), a computer integrator located in Long Island. Innovative
was formerly owned by Surinder Rametra and Ashok Rametra, the Company's
Principal Executive Officer and Principal Financial Officer respectively, and
Rajnish Rametra the brother of Surinder and Ashok.
The consideration for the acquisition was the issuance by the Company of an
aggregate of 4,900,000 shares of the Company's Common Stock to the former
shareholders of Innovative. Rajnish Rametra intends to enter into a three year
employment agreement with Innovative at an annual salary of $165,000 subject to
annual increases, Mr. Rametra will also be provided with major medical health
coverage as well as other benefits.
The terms of the acquisition were not negotiated in an arms-length manner
and there can be no assurance that an unaffiliated company would have paid less
consideration for Innovative than paid by the Company. The Acquisition will be
accounted for as a pooling of interests.
The physical property underlying the Innovative stock acquired by the
Registrant consists of substantially all of the assets of a computer integrator
located at 90 Adams Avenue, Happauge, New York, 11788.
Reference is made to the Stock Purchase Agreement annexed hereto for a
complete description of the Company's transactions with Innovative.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
The following Financial Statements and Exhibits are annexed to this
Amendment #1 to the July 5, 1996 Form 8-K:
a) Audited balance sheets, statements of operations and statements of cash flows
on behalf of Innovative as and for the years ended September 30, 1995, 1994 and
1993.
b) Pro forma combined financial statements (including the Pro Form Adjustments)
of ATEC Group, Inc. and Innovative Business Micros, Inc., as at March 31, 1996
and June 30, 1995, 1994 and 1993 and for the nine month period and the years
then ended.
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATEC GROUP, INC.
(Registrant)
By: s/Surinder Rametra
------------------------------
Surinder Rametra,
Principal Executive Officer and
Chairman of the Board
<PAGE>
George S. Goldberg
Certified Public Accountant
To the Stockholders
Innovative Business Micros, Inc.
I have audited the accompanying balance sheet of Innovative Business
Micros, Inc. as of September 30, 1995 and 1994 and the related statements of
income, retained earnings, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financials statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation. I
believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statement referred to above present fairly, in
all material respects, the financial position of Innovative Business Micros,
Inc. as of September 30, 1995 and 1994 and the results of their operations and
their cash flows for the years then ended in conformity with generally accepted
accounting principles.
George S. Goldberg
Certified Public Accountant
Roslyn Heights, New York
December 12, 1995
F-1
<PAGE>
Innovative Business Micros, Inc.
Balance Sheet
September 30, 1995 and 1994
1995 1994
------------ ------------
ASSETS
Current Assets
Cash $ 477,633 $ 9,612
Accounts receivable, net 2,787,683 2,571,996
Inventories 288,415 213,530
Other assets 9,646 2,459
---------- ----------
Total current assets 3,563,377 2,797,597
---------- ----------
Property and equipment, net 94,131 60,130
Other assets 17,445 15,480
---------- ---------
$3,674,953 $2,873,207
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $2,097,341 $1,341,094
Accrued expenses 384,294 347,141
---------- ----------
Total current liabilities 2,481,635 1,688,235
Notes payable - shareholders 522,045 610,000
---------- ----------
Total liabilities 3,003,680 2,298,235
Stockholders' equity
Common stock of no par value 60,000 60,000
Additional paid-in capital 108,100 108,100
Retained earnings 503,173 406,872
--------- ---------
Total stockholders' equity 671,273 574,972
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $3,674,953 $2,873,207
========== ==========
See accompanying notes
F-2
<PAGE>
Innovative Business Micros, Inc.
Statement of Operations
For the year Ended September 30, 1995 and 1994
1995 1994
----------- -----------
Net sales $18,194,799 $18,386,621
Cost of sales 16,379,241 16,414,593
----------- -----------
Gross profit 1,815,558 1,972,028
----------- -----------
Operating expenses
General & administrative 1,565,192 1,050,891
Selling 105,541 824,752
----------- -----------
Total operating expense 1,670,733 1,875,643
----------- -----------
Income from operations 144,825 96,385
----------- -----------
Other income
Interest income 8,236 16,708
Other income 7,772 31,969
----------- -----------
Total other (expense) income 16,008 48,677
----------- -----------
Income before taxes 160,833 145,062
Provision for income taxes 64,532 61,250
----------- -----------
Net income $ 96,301 $ 83,812
=========== ===========
See accompanying notes
F-3
<PAGE>
Innovative Business Micro, Inc.
Statements of Cash Flows
For the Years Ended September 30, 1995 and 1994
1995 1994
----------- -----------
Cash Flows From Operating Activities
Net income from operations $ 96,301 $ 83,812
Noncash item included in net income
Depreciation and amortization 17,349 11,922
Changes in:
Accounts receivable 216,364 (132,255)
Merchandise inventory 74,885 (46,351)
Prepaid expenses 6,511 (4,380)
Deposits 1,965 2,000
Franchise fee -- 5,000
Accounts payable (633,651) 586,009
Customer credit balances (33,875) 43,383
Accrued liabilities (125,873) 47,431
--------- ---------
Total adjustment (511,023) 488,915
--------- ---------
Net Cash Provided By
(Used By) Operating
Activities 607,324 (405,103)
Cash Flows From Investing Activities
Capital expenditures 51,349 3,800
--------- ---------
Net Cash Provided By
(Used By) Investing
Activities 51,349 3,800
Cash Flows From Financing Activities
Borrowings (87,955) 365,000
--------- ---------
Net Cash Provided By
(Used By) Financing
Activities (87,955) 365,000
--------- ---------
Net Increase (Decrease) In Cash 468,020 (43,903)
Cash at Beginning of Year 9,612 53,515
--------- ---------
Cash at End of Year $ 477,632 $ 9,612
========= =========
See accompanying notes
F-4
<PAGE>
Innovative Business Micros, Inc.
Notes to Financial Statements
September 30, 1995
Note 1: General and Accounting Policies
-------------------------------
Innovative Business Micros, Inc. was incorporated under the laws of the State of
New York on February 1, 1986 and began its operations on June 1, 1987.
Principal Business Activity:
The company operates in one industry segment and is engaged primarily in the
sale of computer hardware and software to businesses, and professional
health care facilities. The Company also provides its customers with a full
spectrum of computer services and technical support; revenues derived from such
services are insignificant.
Inventories:
Inventories are stated at the lower of cost or market using the first-in,
first-out method. Inventories consist of microcomputer hardware, software and
related peripherals and accessories.
Property and Equipment:
Property and equipment are carried at cost. When assets are sold or
retired the cost and related accumulation of depreciation are eliminated from
the accounts, and any gain or loss is reflected in income for the period. the
cost of maintenance and repairs is charged to expense as incurred; significant
renewals and replacements which substantially extend the lives of the assets are
capitalized.
Depreciation is computed on accelerated methods over useful lives ranging
from 5 to 7 years. Leasehold improvements are amortized over the shorter of the
useful life of the improvements or the life of the related lease.
Revenue Recognition:
The Company recognizes revenue at the time products are shipped to its
customers, or when sales are made on a "cash and carry" basis.
Note 2: Other Financial Information
---------------------------
Accounts Receivables:
Accounts receivable, net at September 30, 1995 consists of the following:
Trade receivables $2,802,183
Less allowance for doubtful accounts 14,500
----------
Net receivables $2,787,683
==========
F-5
<PAGE>
Property and Equipment:
Property and equipment are carried at cost and consist of the following at
September 30, 1995:
Automotive equipment $103,586
Furniture and fixture 36,857
Leasehold improvements 31,334
Machinery and equipment 17,076
--------
188,853
Less accumulated depreciation
and amortization 94,722
--------
Total $ 94,131
========
Line of Credit:
To accommodate the Company's financial needs for inventory financing, the
Company has in place credit lines with Deutsche Financial Services and IBM
Corporation ($1,500,000 and $250,000 respectively). IBM Corporation has
temporarily increased the credit line to $500,000. At September 30, 1995, the
indebtedness was as follows:
Deutsche Financial Services $1,184,716
IBM Corporation 107,546
----------
Total lines of credit $1,292,262
==========
Related Party Transactions:
Sales: During the normal course of business, the Company sells to other
entities owned by relatives of former shareholders of Micro Computer Store, Inc.
(MCS) and Sun Computers and Software, Inc. (SCSI). MCS and SCSI were merged into
Hillside Bedding, Inc. a publicly held corporation. Sales to these related
parties for the two years ended September 30, 1995 were $3,080 and $6,816
respectively. As of September 30, 1995, the Company is due from SCSI the amount
of $4,154.
Purchaser: During the normal course of business, the Company buys from
other entities owned by relatives of former shareholders of MCS and SCSI.
Purchases from these related parties amounted to $104,444 and $363,772
respectively for the two years ended September 30, 1995. As of September 30,
1995 and 1994, the Company was indebted to MCS and SCSI in the amount of $10,776
and $1,466, respectively.
F-6
<PAGE>
George S. Goldberg
Certified Public Accountant
To the Board of Directors and Stockholders
Innovative Business Micros, Inc.
Hauppauge, New York
I have audited the accompanying balance sheets of Innovative Business Micros,
Inc. as of September 30, 1994 and 1993 and the related statements of income,
retained earnings, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation. I
believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Innovative Business Micros, Inc. as
of September 30, 1994 and 1993 and the results of their operations and their
cash flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ George S. Goldberg
George S. Goldberg
Certified Public Accountant
Roslyn Heights, New York
January 12, 1995
F-7
<PAGE>
Innovative Business Micros, Inc.
Balance Sheet
September 30, 1994 and 1993
1994 1993
---------- ----------
ASSETS
Current Assets
Cash $ 9,612 $ 53,515
Accounts receivable, net 2,571,996 2,704,251
Inventories 213,530 259,881
Other assets 2,459 6,839
---------- ----------
Total currrent assets 2,797,597 3,024,486
---------- ----------
Property and equipment, net 60,130 68,253
Other assets 15,480 8,480
---------- ----------
TOTAL ASSETS $2,873,207 $3,101,219
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $1,341,094 $1,970,486
Accrued expenses 347,141 394,573
---------- ----------
Total current liabilities 1,688,235 2,365,059
Notes payable - shareholders 610,000 245,000
---------- ----------
Total liabilities 2,298,235 2,610,059
Stockholders' equity
Common stock of no par value 60,000 60,000
Additional paid-in capital 108,100 108,100
Retained earnings 406,872 323,060
---------- ----------
Total stockholders' equity 574,972 491,160
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $2,873,207 $3,101,219
========== ==========
See accompanying notes
F-8
<PAGE>
Innovative Business Micros, Inc.
Statement of Operations
For the Year Ended September 30, 1994 and 1993
1994 1993
----------- -----------
Net sales $18,386,621 $10,590,098
Cost of sales 16,414,593 9,044,985
----------- -----------
Gross profit 1,972,028 1,545,113
----------- -----------
Operating expenses
General & administrative 1,050,891 849,809
Selling 824,752 576,478
----------- -----------
Total operating expenses 1,875,643 1,426,287
----------- -----------
Income from operations 96,385 118,826
----------- -----------
Other income
Interest income 16,708 1,834
Other income 31,969 1,612
----------- -----------
Total other (expense) income 48,677 3,446
----------- -----------
Income before taxes 145,062 122,272
Provision for income taxes 61,250 40,325
----------- -----------
Net income $ 83,812 $ 81,947
=========== ===========
See accompanying notes
F-9
<PAGE>
Innovative Business Micros, Inc.
Statement of Cash Flows
For the Year Ended September 30, 1994 and 1993
1994 1993
----------- -----------
Cash Flows From Operating Activities
Net income from operations $ 83,812 $ 81,947
Noncash items included in net income
Depreciation and amortization 11,922 36,048
Changes in:
Accounts receivable (132,255) 2,149,180
Merchandise inventory (46,351) 139,550
Prepaid expenses (4,380) 3,878
Deposits 2,000 6,040
Franchise fee 5,000 --
Accounts payable 586,009 (1,789,118)
Customer credit balances 43,383 (31,291)
Accrued liabilities 47,431 (299,307)
----------- -----------
Total adjustment 488,915 142,884
----------- -----------
Net Cash Provided By (Used By)
Operating Activities (405,103) (60,937)
Cash Flows From Investing Activities
Capital expenditures 3,800 40,044
----------- -----------
Net Cash Provided By (Used By)
Investing Activities 3,800 40,044
Cash Flows From Financing Activities
Borrowings 365,000 29,600
----------- -----------
Net Cash Provided By (Used By)
Financing Activities 365,000 29,600
----------- -----------
Net Increase (Decrease) In Cash (43,903) (71,381)
Cash at Beginning of Year 53,515 124,896
----------- -----------
Cash at End of Year $ 9,612 $ 53,515
=========== ===========
See accompanying notes
F-10
<PAGE>
Innovative Business Micros, Inc.
Notes to Financial Statements
September 30, 1994 and 1993
Note 1: General and Accounting Policies
Innovative Business Micros, Inc. was incorporated under the laws of the State of
New York on February 1, 1986 and began its operations on June 1, 1987.
Principal Business Activity:
The Company operates in one industry segment and is engaged primarily in the
sale of computer hardware and software to businesses and professional health
care facilities. The Company also provides its customers with a full spectrum of
computer services and technical support; revenues derived from such services are
insignificant.
Inventories:
Inventories are stated at the lower of cost or market using the first-in,
first-out method. Inventories consist of microcomputer hardware, software and
related peripherals and accessories.
Property and Equipment:
Property and equipment are carried at cost. When assets are sold or returned,
the cost and related accumulation of depreciation are eliminated from the
accounts, and any gain or loss is reflected in income for the period. The cost
of maintenance and repairs is changed to expense as incurred; significant
renewals and replacements which substantially extend the lives of the assets are
capitalized.
Depreciation is computed on accelerated methods over useful lives ranging from 5
to 7 years. Leasehold improvements are amortized over the shorter of the useful
life of the improvements or the life of the related lease.
Revenue Recognition:
The Company recognizes revenue at the time products are shipped to its
customers, or when sales are made on a "cash and carry" basis.
F-11
<PAGE>
Note 2: Other Financial Information
Accounts Receivable:
The Company's trade accounts receivable at September 30, are detailed as
follows:
1994 1993
---- ----
Current $1,133,903 $1,817,106
Over 30 days 935,411 648,624
Over 60 days 277,499 187,838
Over 90 days 62,563 21,719
Over 120 days 162,620 24,749
---------- ----------
Totals $2,571,996 $2,700,036
========== ==========
Property and Equipment:
Property and equipment are carried at cost and consists of the following at
September 30,
1994 1993
---- ----
Automotive equipment $ 69,395 $ -.-
Furniture and fixture 39,974 25,569
Leasehold improvements 108,134 108,134
-------- --------
217,503 133,703
======== ========
Less: accumulated depreciation
and amortization 157,373 65,451
-------- --------
Total $ 60,130 $ 68,253
======== ========
F-12
<PAGE>
Line of Credit:
To accommodate the Company's financial needs for inventory financing, the
Company has in place credit lines with ITT Commercial Finance and IBM
Corporation ($1,500,000 and $250,000 respectively).
Commitments:
The Company occupies its offices and warehouse facilities at 90 Adams Avenue,
Hauppauge, New York under a non-cancelable operating lease for a term of five
years and fifteen days expiring February 15, 1998.
The lease commitment is as follows:
Fiscal year ended September 30, 1995 $ 36,917
September 30, 1996 38,656
September 30, 1997 40,580
September 30, 1998 13,745
---------
$ 129,798
=========
Related Party Transactions:
During the normal course of business, the Company sells to and buys from other
entities owned by relatives of former shareholders of Micro Computer Store, Inc.
and Sun Computers and Software, Inc. Micro Computer Store, Inc. (MCS) and Sun
Computers and Software, Inc. (SCSI) were merged into Hillside Bedding, Inc., a
publicly held corporation. Sales to these related parties for the year ended
September 30, 1993 were $11,449 and $45,681, respectively. Purchases from same
were $29,804 and $395,160, respectively. As of September 30, 1993 the Company
was due from SCSI the amount of $1,952, and was indebted to MCS and SCSI in the
amount of $47,842 and $125,308, respectively.
F-13
The Pro Forma Combined Financial Statements (including the Pro Forma
Adjustments) of ATEC Group, Inc. and Innovative Business Micros, Inc. As at
March 31, 1996 and June 30, 1995, 1994 and 1993 and for the nine month period
and the years then ended included in this Prospectus and Registration Statement
were not examined, reviewed or compiled by Yohalem Gillman & Company or
Bianculli, Pascale & Co., and those firms do not express an opinion or any other
form of assurance on them.
F-14
<PAGE>
<TABLE>
ATEC GROUP, INC. AND SUBSIDIARIES
PRO FORMA COMBINED BALANCE SHEETS (Unaudited)
March 31, 1996
<CAPTION>
Proforma Proforma
ATEC Group, Inc. Innovative Adjustments Combined
---------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Assets
Current Assets
Cash $ 1,159,430 $ 335,757 $ 1,495,187
Accounts receivable, net 3,551,284 4,325,978 (29,844) 7,847,418
Inventories 1,884,553 166,408 2,050,961
Deferred taxes 15,213 -- 15,213
Other current assets 581,807 5,632 587,439
----------- ---------- -----------
Total current assets 7,192,287 4,833,775 11,996,218
----------- ---------- -----------
Property and equipment, net 384,124 85,760 469,884
Goodwill, net 2,000,045 -- 2,000,045
Other assets 91,982 22,445 114,427
----------- ---------- -----------
$ 9,668,438 $4,941,980 $14,580,574
=========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Revolving inventory line of credit $ 2,411,192 $ -- $ 2,411,192
Accounts payable 706,009 3,343,119 29,844 4,019,284
Accrued expenses 923,807 130,009 1,053,816
Deferred sales tax obligation 502,052 -- 502,052
Other current liabilities 1,318 -- 1,318
----------- ---------- -----------
Total current liabilities 4,544,378 3,473,128 7,987,662
Notes payable - officers and shareholders 397,244 500,000 897,244
----------- ---------- -----------
Total liabilities 4,941,622 3,973,128 8,884,906
Stockholders' equity
Preferred stocks 11,003,496 -- 11,003,496
Common Stock 141,138 60,000 (55,100) 146,038
Additional paid-in capital 4,085,300 108,100 55,100 4,248,500
Discount on preferred stock (9,046,100) -- (9,046,100)
Retained earnings (deficit) (1,457,018) 800,752 (656,266)
----------- ---------- -----------
Total stockholders' equity 4,726,816 968,852 5,695,668
----------- ---------- ----------
$ 9,668,438 $4,941,980 $14,580,574
=========== ========== ===========
</TABLE>
F-15
<PAGE>
<TABLE>
ATEC GROUP, INC. AND SUBSIDIARIES
PROFORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
NINE MONTHS ENDED MARCH 31, 1996
<CAPTION>
Proforma Proforma
ATEC Group, Inc. Innovative Adjustments Combined
---------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 45,196,268 $ 17,677,340 230,999 62,642,609
Cost of sales 41,585,007 16,229,026 (230,999) 57,583,034
------------ ------------ ------------
Gross profit 3,611,261 1,448,314 5,059,575
------------ ------------ ------------
Operating expenses
Selling and administrative 2,965,989 1,112,155 4,078,144
Amortization of goodwill -
computer businesses 108,051 -.- 108,051
------------ ------------ ------------
Total operating expenses 3,074,040 1,112,155 4,186,195
------------ ------------ ------------
Income (Loss) from operations 537,221 336,159 873,380
------------ ------------ ------------
Other income (expense)
Miscellaneous income 12,199 8,490 20,689
Interest income 6,745 20,235 26,980
Interest expense (42,666) -.- (42,666)
------------ ------------ ------------
Total other (expense) income (23,722) 28,725 5,003
------------ ------------ ------------
Income (loss) before provision for
income taxes 513,499 364,884 878,383
Provision for income taxes 205,400 134,034 339,434
------------ ------------ ------------
Net income (loss) $ 308,099 $ 230,850 $ 538,949
============ ============ ============
Net earnings (loss) per share:
Primary $ 0.03 N/A $ 0.04
============ ============ ============
Fully Diluted $ 0.02 N/A $ 0.03
============ ============ ============
Weighted average number of
share - primary 8,868,008 N/A 13,768,008
============ ============ ============
Weighted average number of
share - fully diluted 12,513,922 N/A 17,413,922
============ ============ ============
</TABLE>
F-16
<PAGE>
<TABLE>
ATEC GROUP, INC. AND SUBSIDIARIES
PROFORMA COMBINED BALANCE SHEETS (UNAUDITED)
June 30, 1995
<CAPTION>
Proforma Proforma
ATEC Group, Inc. Innovative Adjustments Combined
---------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 441,462 $ 477,633 $ 919,095
Accounts receivable, net 3,129,688 2,787,683 (6,622) 5,910,749
Inventories 1,438,126 288,415 1,726,541
Current portion of note receivable
- officer 16,218 -- 16,218
Due from officers and related parties 65,791 -- 65,791
Deferred taxes 15,213 -- 15,213
Other Current assets 310,336 9,846 319,982
---------- ---------- ------------
Total current assets 5,416,834 3,563,577 8,973,589
---------- ---------- ------------
Property and equipment, net 340,493 94,131 434,624
Goodwill, net 2,108,096 -- 2,108,096
Note receivable - officer 94,691 -- 94,691
Other assets 96,493 17,445 113,938
---------- ---------- -----------
$ 8,056,607 $3,674,953 $11,724,938
========== ========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Revolving inventory line of credit $ 1,668,371 -- $ 1,668,371
Accounts payable 1,597,144 2,097,341 6,622 3,687,863
Accrued expenses 390,077 384,294 774,371
Deferred sales tax obligation 502,052 -- 502,052
Due to related parties 25,000 -- 25,000
Other current liabilities 206,754 -- 206,754
----------- ---------- ------------
Total current liabilities 4,389,398 2,481,635 6,684,411
Notes payable - related parties 396,246 522,045 918,291
----------- ---------- ------------
Total liabilities 4,785,644 3,003,680 7,782,702
----------- ---------- ------------
Stockholders' equity
Preferred stocks 3,338,193 -- 3,338,193
Common stock 128,321 60,000 (55,100) 133,221
Additional paid-in capital 2,736,566 108,100 55,100 2,899,766
Discount on preferred stock (1,167,000) -- (1,167,000)
Retained earnings (deficit) (1,765,117) 503,173 (1,261,944)
----------- ---------- -----------
Total stockholders' equity 3,270,963 671,273 3,942,236
----------- ---------- -----------
$ 8,056,607 $3,674,953 $11,724,938
=========== ========== ===========
</TABLE>
F-17
<PAGE>
<TABLE>
ATEC GROUP, INC. AND SUBSIDIARIES
PROFORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED JUNE 30, 1995
<CAPTION>
Proforma Proforma
ATEC Group, Inc. Innovative Adjustments Combined
---------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $29,738,315 $18,194,799 367,572 47,565,542
Cost of sales 26,848,934 16,379,241 (367,572) 42,860,603
----------- ----------- ----------
Gross profit 2,889,381 1,815,558 4,704,939
----------- ----------- ----------
Operating expenses
Selling and administrative 2,892,604 1,670,733 4,563,337
Amortization of goodwill -
computer businesses 52,655 -- 52,655
Write-off of media advertising credits 448,011 -- 488,011
----------- ----------- ----------
Total operating expenses 3,393,270 1,670,733 5,064,003
----------- ----------- ----------
Income (Loss) from operations (503,889) 144,825 (359,064)
----------- ----------- ----------
Other Income (expense)
Charge-off of goodwill relating to
acquisition of Hillside (2,045,628) -- (2,045,628)
(Losses) gain on marketable securities (4,136) -- (4,136)
Gain on sale of fixed assets 4,432 -- 4,432
Dividend and interest income 14,472 8,236 22,708
Interest expense (138,553) -- (138,553)
Management fees 375,000 -- 375,000
Other income 37,661 7,772 45,433
----------- ----------- ----------
Total other (expense) income (1,756,752) 16,008 (1,740,744)
----------- ----------- ----------
Income (loss) before provision for
income taxes (2,260,641) 160,833 (2,099,808)
Provision for income taxes 87,014 64,532 151,546
----------- ----------- ----------
Net income (loss) ($2,347,655) $ 96,301 ($2,251,354)
=========== =========== ===========
Net earnings (loss) per share:
Primary ($0.59) N/A ($0.25)
=========== =========== ===========
Fully Diluted ($0.59) N/A ($0.25)
=========== =========== ===========
Weighted average number of
share - primary 3,972,333 N/A 8,872,333
=========== =========== ===========
Weighted average number of
share - fully diluted 3,972,333 N/A 8,872,333
=========== =========== ===========
</TABLE>
F-18
<PAGE>
<TABLE>
ATEC GROUP, INC. AND SUBSIDIARIES
PRO FROMA COMBINED BALANCE SHEETS (UNAUDITED)
June 30, 1994
<CAPTION>
Proforma Proforma
ATEC Group, Inc. Innovative Adjustments Combined
---------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 222,459 $ 9,612 $ 232,071
Accounts receivable, net 1,446,221 2,571,996 (1,466) 4,016,751
Inventories 898,477 213,530 1,112,007
Current portion of note
receivable - officer 20,119 -- 20,119
Due from officers and related parties 130,091 -- 130,091
Deferred taxes 6,285 -- 6,285
Other current assets 54,571 2,459 57,030
---------- ---------- ----------
Total current assets 2,778,223 2,797,597 5,574,354
---------- ---------- ----------
Property and equipment, net 292,047 60,130 352,177
Media advertising credits 448,011 -- 448,011
Goodwill, net 1,210,000 -- 1,210,000
Notes receivable - officer 109,155 -- 109,155
Other assets 19,175 15,480 34,655
---------- ---------- ----------
$4,856,611 $2,873,207 $7,728,352
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Revolving inventory line of credit $ 665,020 $ -- $ 665,020
Accounts payable 869,939 1,341,094 1,466 2,209,567
Notes payable - related parties 300,000 -- 300,000
Accrued expenses 428,741 347,141 775,882
Deferred sales tax obligation 443,212 -- 443,212
Due to related parties 26,615 -- 26,615
Other current liabilities 122,396 -- 122,396
---------- ---------- ----------
Total current liabilities 2,855,923 1,688,235 4,542,692
Convertible notes payable 415,500 -- 415,500
Notes payable - related parties 554,755 610,000 1,164,755
---------- ---------- ----------
Total liabilities 3,826,178 2,298,235 6,122,947
---------- ---------- ----------
Stockholders' equity
Preferred stocks 5,898 -- 5,898
Common stock 53,441 60,000 55,100 58,341
Additional paid-in capital 388,246 108,100 (55,100) 551,446
Discount on preferred stock -- -- --
Retained earnings (deficit) 582,848 406,872 989,720
---------- ---------- ----------
Total stockholders' equity 1,030,433 574,972 1,605,405
---------- ---------- ----------
$4,856,611 $2,873,207 $7,728,352
========== ========== ==========
</TABLE>
F-19
<PAGE>
<TABLE>
ATEC GROUP, INC. AND SUBSIDIARIES
PROFORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED JUNE 30, 1994
<CAPTION>
Proforma Proforma
ATEC Group, Inc. Innovative Adjustments Combined
---------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $25,481,246 $18,386,621 111,262 43,756,605
Cost of sales 23,662,100 16,414,593 (111,262) 39,965,431
----------- ----------- ----------
Gross profit 1,819,146 1,972,028 3,791,174
----------- ----------- ----------
Operating expenses
Selling and administrative 2,167,528 1,875,643 4,043,171
Amortization of goodwill -
computer businesses -- -- --
Write-off of media advertising credits -- -- --
----------- ----------- ----------
Total operating expenses 2,167,528 1,875,643 4,043,171
----------- ----------- ----------
Income (Loss) from operations (348,382) 96,385 (251,997)
----------- ----------- ----------
Other income (expense)
Charge-off of goodwill relating to
acquisition of Hillside -- -- --
(Losses) gain on marketable securities (17,577) -- (17,577)
Gain on sale of fixed assets -- -- --
Dividend and interest income 42,847 16,708 59,555
Interest expense (48,051) -- (48,051)
Management fees -- -- --
Other income 72,543 31,969 104,512
----------- ----------- ----------
Total other (expense) income 49,762 48,677 98,439
----------- ----------- ----------
Income (loss) before provision for
income taxes (298,620) 145,062 (153,558)
Provision for income taxes 11,271 61,250 72,521
----------- ----------- ----------
Net income (loss) ($309,891) $ 83,812 ($226,079)
=========== =========== ==========
Net earnings (loss) per share:
Primary ($0.80) N/A ($.04)
=========== =========== ==========
Fully Diluted N/A N/A ($.04)
Weighted average number of share
- primary 389,573 N/A 5,289,573
=========== =========== ==========
Weighted average number of share
- fully diluted 389,573 N/A 5,289,573
=========== =========== ==========
</TABLE>
F-20
<PAGE>
<TABLE>
ATEC GROUP, INC. AND SUBSIDIARIES
PROFORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
YEAR ENDED JUNE 30, 1993
<CAPTION>
Proforma Proforma
ATEC Group, Inc. Innovative Adjustments Combined
---------------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $ 39,836,094 $ 10,590,098 522,094 49,904,098
Cost of sales 37,658,588 9,044,985 (522,094) 46,181,479
------------ ------------ ------------
Gross profit 2,177,506 1,545,113 3,722,619
------------ ------------ ------------
Operating expenses
Selling and administrative 1,944,577 1,426,287 3,370,864
Amortization of goodwill -
computer businesses -.- -.- 0
------------ ------------ ------------
Total operating expenses 1,944,577 1,426,287 3,370,864
------------ ------------ ------------
Income (Loss) from operations 232,929 118,826 351,755
------------ ------------ ------------
Other income (expense)
Miscellaneous income 1,124 1,612 2,736
Dividend and interest income 37,057 1,834 38,891
Intereest expense (69,028) -.- (69,028)
Gain on marketable securities 11,445 -.- 11,445
------------ ------------ ------------
Total other (expense) income (19,402) 3,446 (15,956)
------------ ------------ ------------
Income (loss) before provisio
for income taxes 213,527 122,272 335,799
Provision for income taxes 79,922 40,325 120,247
------------ ------------ ------------
Net income (loss) $ 133,605 $ 81,947 $ 215,552
============ ============ ============
Net earnings (loss) per share:
Primary $ 0.34 N/A $ 0.04
============ ============ ============
Fully Diluted $ 0.02 N/A $ 0.02
============ ============ ============
Weighted average number of
share - primary 389,573 N/A 5,289,573
============ ============ ============
Weighted average number of
share - fully diluted 8,236,972 N/A 13,136,972
============ ============ ============
</TABLE>
F-21
<PAGE>
ATEC GROUP, INC.
NOTES TO PRO FORMA COMBINED
FINANCIAL STATEMENTS
Innovative Business Micros, Inc.
1. Basis of Presentation
The pro forma combined financial statements include historical financial
statements of ATEC Group, Inc. and Innovative Business Micros, Inc.
("Innovative"). Innovative's year end is September 30. The proforma financial
statements at March 31, 1996 includes its results of operations for the nine
months ended March 31, 1996. The proforma financial statements at March 31, 1996
includes sales of $4,562,132 and net income of $46,371 for the three months
ended September 30, 1995, which are also included in the historical financial
statements for the year ended September 30, 1995. Innovative will change its
fiscal year end to June 30. The audited information at September 30, 1995, 1994
and 1993 of Innovative is included in the proforma combined financial statements
at June 30, 1995, 1994 and 1993. All intercompany transactions have been
eliminated.
2. Acquisition
On June 13, 1996, the Company acquired Innovative, a Long Island, NY
computer systems integrator. The Company acquired 100% of the issued and
outstanding capital stock of Innovative. As consideration for the Innovative
stock, the Company agreed to issue to the Shareholders 4,900,000 shares of the
Company's common stock.
Innovative is owned by Surinder Rametra, Ashok Rametra (officers, directors
and shareholders of ATEC) and Rajnish Rametra. Rajnish Rametra is the brother of
Surinder and Ashok Rametra. The transaction will be accounted for by application
of the pooling of interests method.
3. Intercompany sales and purchases
For the nine months endedMarch 31, 1996 and the year ended June 30, 1995
ATEC and Innovative had intercompany sales and purchases of $108,262 and
$367,572 respectively. Intercompany sales and purchases were $111,262 for the
year ended June 30, 1994. These transactions have been eliminated in the
accompanying pro forma combined statements. There was 29,844 of intercompany
receivables or payables March 31, 1996.
F-22
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